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Low-Cost Production of Butanol
from Carbon Dioxide Emissions
Sustainable Chemistry Powered by the Sun™
Carbon Capture Instigated by Synthetic Biology
April 20, 2016
Bruce Dannenberg,
Founder, President & CEO
Gordon Skene,
Executive Vice President & Director
[email protected]
+1 (828) 230-5892
[email protected]
+1 (604) 790-8989
www.Phytonix.com
Phytonix uses cyanobacteria
as microbial chemical factories
Cyanobacteria are tiny
photosynthetic microorganisms
abundant in all climates
Blue-green aquatic
phytoplankton are a type of
cyanobacteria
Phytonix utilizes synthetic biology to develop engineered
cyanobacterial strains that directly secrete 100% n-butanol
or other target chemicals from CO2 emissions
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Phytonix Bio-butanol Markets
• Butanol industrial chemical market. $9 billion/year
– Used in paints, plastics, adhesives, solvents, and other products.
– Initial target market. Current wholesale price ≈ $6.25/gallon.
Estimated cost of Phytonix bio-butanol = $1.35/gallon
• Future Phytonix biofuel markets
– Bio-butanol approved for a 16% blend with gasoline. $140 billion/year.
– Gasoline engines can run on 100% bio-butanol.
$900 billion/year.
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Microbial Chemical Factories
For every gallon of n-butanol produced
16.3 pounds (net) of carbon dioxide is consumed
RECYCLED
37 – 38 gallons water
40 gallons water
CYANOBACTERIA
17.86 lbs carbon dioxide
1.0 gallon n-butanol
Grown in a
Phytonix PhytoconverterTM
natural sunlight
CELL GROWTH
1.79 lbs carbon dioxide
17.54 lbs oxygen
EVAPORATION
0.5 – 1.0 gallons water
Production generates 1.3 – 1.5 lbs carbon dioxide
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Photosynthesis and the Calvin Cycle
Photosynthesis in plants,
such as algae and
cyanobacteria, typically
produces sugars from CO2
using energy from the sun.
Phytonix has patented
technology for engineering
cyanobacteria to directly
produce n-butanol instead
of sugars from CO2, with
oxygen and “green crude” as
a co-products.
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N-butanol and 1-butanol are the same
(C4H9OH)
CO2
WATER
WATER
Carbon based
SOLAR FUEL &
BIO-CHEMICALS
N-butanol molecule
Photobioreactors
to Grow Cyanobacteria
Phytonix “Basic” photobioreactors (PBRs) will
produce 83,000 gallons of butanol / acre / year.
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Phytonix Energy & Value from PBRs vs
Solar Cells on One Acre (per year)
Solar
Cells
Phytonix
PBRs
Ratio
≈ 0.45
≈ 2.55
5.7X
Liquid Fuel / Storable Energy (gallons/year)
N/A
83,000
Amount of Electricity (MWh/year) (note 1)
450
N/A
Value of Electricity @ $60.00/MWh
$27,000
N/A
Value of Electricity vs. Butanol Biofuel @ $2.00/gal.
$27,000
$166,000
6X
Value of Electricity vs. Butanol Chem. @ $6.25/gal.
$27,000
$519,000
19X
Energy created (GWh/year)
Note 1: Bio-butanol could be used in Co-Gen engines to produce 1,147
MWh/year of electricity (45% efficiency). Value = $69,000/year at $60/MWh.
(CO2 from Co-Gen used to make more butanol.)
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International Patent Portfolio
Patent No. US 8,735,651 issued in 2014
UNITED
STATES
PATENT
“Designer
Organisms for Photobiological Butanol Production
from Carbon Dioxide and Water”
Australia and South African patents issued in 2015
OTHER
MAJOR
MARKETS
Patents expected in 2016/17:
- EU, Israel, Eurasia, China, India,
Indonesia, Canada, Malaysia & Japan
PATENT
COST
Over $600,000 invested to secure Phytonix patents
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Phytonix: Low-Cost Butanol Production
Fossil
~ $5.25/gal
Propylene (fossil) feedstock cost
= $3.00/gallon of butanol
TOTAL COST
Phytonix CO2 feedstock cost
= $0.35/gallon of butanol
(assumes cost of CO2 = $40/ton)
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
Fossil variable cost
= $3.66/gal
Phytonix variable cost = $0.85/gal
$1.35/gal
TOTAL COST
INCUMBENTS
PHYTONIX
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Competitors using propylene
(BASF, DOW, OXEA, etc.)
have high energy costs
+ a large carbon footprint.
Butanol Competition
• Incumbent fossil-based producers: BASF, DOW,
Eastman, OXEA, etc.
– Expensive, carbon intensive and energy intensive.
• Fermentation/bio-based producers: Gevo, Butamax
(BP/DuPont JV), Cobalt Technologies, Green Biologics
– Biomass feedstock = expensive, generates CO2 as a waste product.
• Phytonix solar-based production:
– CO2 feedstock = very low-cost process, with low energy cost.
– Highly carbon-negative process.
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Cyanobacterial Chemical
Production Platform
Besides butanol, the Phytonix technology platform enables it to
genetically engineer patentable species of cyanobacteria that
can each produce valuable biochemicals and biofuels such as:
 C10, C12, C14, C16, C18, C20, C22, C24, etc. alcohols
 N-butanol precursors
 Pentanol, hexanol, heptanol, octanol
 Medium & long chain fatty acids
 Direct photosynthetic production of other fuels & chemicals
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Technology Partners
Contracted by Phytonix
The Angstrom Laboratory, Sweden (Uppsala University):
Engineered the Phytonix cyanobacteria prototype with modified
butyrate pathway which utilizes carbon dioxide feedstock to
produce 100% n-butanol.
(Dr. Peter Lindblad)
The Lee Laboratory, Virginia (Old Dominion University):
Genomic transformance of amino acid-based n-butanol pathway
in high temperature tolerant cyanobacteria.
(Dr. James Lee)
The Anderson Laboratory, South Dakota (SDSU):
Design and bench scale testing of Phytonix Phytoconverter™
(photobioreactor) with butanol separation system.
(Dr. Gary Anderson)
Collaborative international organizational structure has
enabled “capital-light” innovation and on-site testing.
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Development Plan
Prototype Completed
2014: Technology proven at lab scale. Cyanobacteria secrete
100% n-butanol using CO2 feedstock. US patent issued.
Tech
Develop
JV
JV
Technology
Demonstration
Project-based
Commercialization
2017: field test @ 1,000 gallons/year butanol.
2018: Pilot plants @ 25,000 gallons/year
In several industries emitting CO2.
2019/20: Small Commercial scale plants.
Each 250,000 to 2,500,000 gallons/year.
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Potential Industrial Partners Emitting CO2
as feedstock for Phytonix Biobutanol
Industry
CO2
Produced
Production of
Butanol from CO2
Plant Revenue
$6.25/gal Butanol
(tons/year)
(gallons/year)
($/year)
200,000
25,000,000
$156 million
Large natural gas wells
2,000,000
250,000,000
$1.56 billion
Large steel mill
4,000,000
500,000,000
$3.12 billion
Oil Sands
Very high
Very high
Very high
Large fuel ethanol facility
Phytonix plants are scalable and cost-effective at capacities ranging from
250,000 to 1 billion gallons/year of n-butanol. Broad market opportunity.
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Phytonix Plant Economics (e)
Small Size
Phytonix Plant
Medium Size
Phytonix Plant
$14 million
$70 million
2.5 million gal/yr.
25 million gal/yr.
CO2 feedstock
20,000 tons/yr.
200,000 tons/yr.
Revenue: Butanol @ $6.25/gallon
$15 million/year
$155 million/year
EBITDA
$11 million/year
$115 million/year
≈ 1.3 years
< 1 year
CAPEX
Bio-butanol production
EBITDA Payback on Investment
Phytonix plants are scalable and cost-effective at capacities ranging
from 250,000 to 500 million gallons/year of n-butanol.
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Land and Water Requirements
• 20,000 sq. miles of fertile land in the USA is used to grow corn to
produce 13 billion gallons/year of ethanol.
• 245 sq. miles of non-arable land would be required by Phytonix to
produce 13 billion gallons/year of butanol (a far superior biofuel).
Water
Land
 Cyanobacteria thrive in salt,
brackish, or fresh water
 Non-arable land. (Saves arable
 H2O used/gallon of biofuel:
 Phytonix butanol yield/acre:
land for food production)
= 75X yield of corn ethanol
- Phytonix butanol = 2.5 gallons
- Corn ethanol
= 200 gallons
= 12X energy yield of solar
PVC/acre (in joules)
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Management Team
MANAGEMENT
+
BOARD
OF DIRECTORS
 Bruce Dannenberg: Founder & CEO
 Gordon Skene: Executive Vice President
 Michael Weedon: Independent Director
 Two additional independent directors
 Dr. Peter Lindblad: Director, Organism Development
TECHNOLOGY TEAM
 Dr. Gary Anderson: Director, Photobioreactor Develp.
 Dr. James Lee: Phytonix Inventor & Scientist
 Ms. Soody Tronson: Director, IP Law
Advisors with expertise in:
BOARD OF ADVISORS
Chemicals Market, Government Policy, Business,
Finance, IP Law, Synthetic Biology, Clean Technology.
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Strategic Partners
• ThyssenKrupp - Conglomerate ($50 billion annual revenue)
• Japanese Chemical Company ($6 billion annual revenue)
• European oil & gas majors (2)
• U.S. & European chemical companies
• Natural Gas producers (pipeline compression stations)
• Aluminum & Steel producers
Industrial partners emitting CO2 will host and fund pilot plants.
Minimizes dilution to Phytonix shareholders.
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2016 Series A Offering
Use of Proceeds
Offering: $4.0 million
 $2.5m angel investor
groups
 On-site testing (1,000 gal/yr.)
at industrial site emitting CO2
 $1.5m strategic partners
 Optimization of cyanobacteria
species
 Units
 Refine PhytoconverterTM and
butanol separation equipment
Common Share +
- Full Warrant (≈ 3 years)
-
 Continue to build IP portfolio
and patent protection
 Valuation $10m
- 135,000,000 shares o/s
 Working capital & expenses
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Phytonix Summary
• Patented process, proven at lab scale.
– 100% butanol from industrial CO2 emissions
• Scalable, low-cost process. Low CAPEX.
• Industrial emitters of CO2 fund commercialization process.
• Carbon-negative process. Huge GHG reduction.
– CO2 consumed by small plants ≈
– CO2 consumed by steel mill
CONTACT:
20,000 tons/year.
≈ 4,000,000 tons/year.
Bruce Dannenberg
[email protected]
+1 (828) 230-5892
Gordon Skene
[email protected]
+1 (604) 790-8989
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www.phytonix.com
Backup Slides
March 2016
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Valuation & Investor Liquidity
Liquidity Options
Rising Valuation
 Acquisition by:
As milestones are met:
1. 1,000 gal/yr. field trial
(2017)
- major chemical company
2. Pilot 25,000 gal/yr.
(2018)
- major oil company
- listed synthetic biology
companies
3. Small commercial scale
plants 500,000+ gal/yr. (2019/20)
- listed bio-fuel producers
 IPO
Valuation potential > $500 million
Prime acquisition candidate. Potential for 15X to 40X return.
Acquisition offers expected upon achieving Milestones 1, 2, or 3.
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Management Team
SENIOR
MANAGEMENT
+
BOARD
OF
DIRECTORS
Mr. Bruce Dannenberg: Founder, President & CEO. Director. Expertise in innovation and
commercialization, genetics, microbiology, financial management and industrial management.
Degrees in Zoology, industrial management (M.S.) & business administration (M.B.A.)
Mr. Gordon Skene: Executive Vice President & Director. Former CEO of several technology
companies and of a VC technology fund. BSc. (Physics & Economics). MSc. Business
Administration (Finance). Former Director of Finance for an industrial corporation with sales of
$3 billion, listed NYSE.
Mr. Michael Weedon: Independent Director. Executive Director of the British Columbia
Bioenergy Network with 25 years of experience in finance, clean technology and senior
management, including a large chemical company.
Dr. Peter Lindblad: Phytonix Technology Director, Organism Development. Director of the
Angstrom Laboratory and Professor of Microbial Chemistry and Molecular Biology at Uppsala
University in Sweden.
TECHNOLOGY
TEAM
Dr. Gary Anderson: Phytonix Technology Director, Photobioreactor Development. Professor
of Agricultural & Biosystems Engineering at South Dakota State University.
Dr. James Lee: Phytonix Inventor & Scientist: Expertise and degrees in photosynthesis, plant
physiology, biochemistry, and synthetic biology (Cornell).15 years at Oak Ridge National Lab.
Ms. Soody Tronson: Phytonix Director, Intellectual Property Law. Principal, Soody Tronson
Law Group. Practiced IP law for over 25 years in Silicon Valley.
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Board of Advisors
Mr. Scott Hickman: 30 years of management experience ranging from startups to Fortune 500 firms;
13 years with Sun Microsystems. MBA (Harvard). BS Industrial Engineering (Stanford).
Mr. William Tate: Senior executive with companies ranging in size from $20M to over $2B.
Former CEO of a Fortune 500 company. Expertise in strategy and performance improvement.
Dr. Robert Stewart: Former Biotechnology Manager at Lanxess, Iogen Biofuels and InBev and an
expert on renewable routes for biobstanol production.
Mr. Barry Code: Retired senior marketing manager of a large Canadian oil & gas company, and
former president of an independent bio-diesel distribution company.
Mr. Peter Hoyle: Product Manager of Quadra Chemicals, a leading North American distributor of
industrial chemicals including butanol. Consultant on renewable resources in industrial applications
as replacements to hydrocarbon-based materials.
Mr. John Robertshaw: Industrialist and commercial real estate developer with a substantial real
estate and private equity portfolio. An active investor in emerging technology companies.
Dr. Victor Der: Executive Adviser, Global Carbon Capture and Storage Institute. Former Assistant
Secretary, US Department of Energy, leading initiatives in clean coal, carbon capture, and oil & gas
R&D. Former Chair of the Carbon Sequestration Leadership Forum Policy Group.
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History
2008-2010
• Core technology invented by Dr. James W. Lee
• Phytonix acquires exclusive global technology rights.
2010 – 2012
• Phytonix contracts leading international experts to
develop technology and build IP/patent portfolio.
2014
• Phytonix scientists produce 100% n-butanol from
CO2 using its proprietary engineered cyanobacteria.
• US patent issued May 2014 (No. US 8,735,651).
2015
• ThyssenKrupp AG selects Phytonix to reduce CO2
emissions at its steel mills.
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Phytonix Future Milestones
2017
• Field test. Produce 1000 gallons/year of butanol.
• $2.5 million of equity for field test, working capital, and refinement of
microorganisms to produce n-butanol.
• Field test phytobioreactors + butanol separation equipment.
2018
• On-site pilot plants producing 25,000 gallons/year.
• Technology integration and development.
• Pilot plants funded by strategic partners & grants.
2019/20
• Small commercial plants each producing 250,000 to 2,500,000
gallons/year of butanol. Revenue ≈ $2m to $9m/year per plant.
Project capital from strategic partners + project debt ≈ $10 million.
2020/21
• Larger commercial scale plants at industrial sites emitting CO2.
• Fund plants with JVs and project financing.
• Explore international licensing.
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Fuel Characteristics
Quality
Methanol
Ethanol
Butanol
Gasoline
Chemistry
Ch3OH
C2H5OH
C4H10OH
Many
Energy Content
(mega joules/ litre)
16 MJ/L
19.6 MJ/L
29.2 MJ/L
32 MJ/L
Vapor Pressure @
100F (Reid V.P.)
4.6 PSI
2.0 PSI
0.33 PSI
4.5 PSI
Motor Octane (RON)
91
92
94
96
Air-to-Fuel Ratio
6.6
9
11.1
12-15
Phytonix n-butanol has high energy content, less evaporative (safer),
no seasonal blends required, non-corrosive, can be used as a “drop-in”
gasoline replacement fuel, large n-butanol industrial chemical market.
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Butanol vs. Ethanol as a Biofuel
•
HIGH ENERGY DENSITY: ≈ 50% higher than ethanol.
•
SAFER: 7x less evaporative than ethanol.
•
GASOLINE ENGINES CAN RUN ON 100% BUTANOL (with a minor
fuel-air injection ratio adjustment): Not possible with ethanol.
•
ETHANOL IS HIGHLY CORROSIVE: Except in low concentrations,
ethanol cannot be used in existing tanks, pipelines & fuelling stations.
•
BUTANOL HAS MANY INDUSTRIAL USES: Ethanol does not.
(Solvents, plastics, paints, adhesives, cleaning products, etc.).
•
LOW EMISSIONS (both butanol & ethanol): No sulfur dioxides,
carbon monoxide or particulates.
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Proprietary Components of the
Phytonix Process
•
Calvin Cycle intermediated production of butanol and other chemicals:
–
Synthetic biology, metabolomics, proteomics, bioinformatics and genomics
technology for streamlined engineering of gene coding for chemical synthesis
pathways resulting in photobiological chemical production.
• Patentable, engineered species of cyanobacteria that provide:
– Direct secretion by microbes of n-butanol from CO2 feedstock.
– Efficient conversion of CO2 to n-butanol.
– High yield of n-butanol per acre (≈ 20X algae).
• Proprietary photobioreactor system (PhytoconverterTM) to grow cyanobacteria and
efficiently harvest n-butanol secreted by microbes.
•
Cell-division control technology to achieve high yield:
– Redundant biosafety-guarded technology.
•
Technology enables increased photosynthetic efficiency suitable for lower light and
temperature climatic conditions.
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